5 things you must not forget to make your SME successful

SMEs account for more than 90% of the companies in Chile, being the engine of the economy and job creation in Chile, so they play a very important role in the country's development.  

According to Redcapital's latest SME Radar Report, in the last 6 years the creation of new companies grew by 150%. But how to form a company and prosper? This is key, as more than 90% of SMEs fail before 5 years for several reasons.

En Wherex hemos abierto la posibilidad de venta en un mercado justo, competitivo y transparente y actualmente más de 10 mil pequeñas y medianas empresas son parte de nuestro pool de proveedores. Hoy queremos apoyarlos con algunos consejos financieros que nos comparte Chipax, el software #1 de gestión financiera para pymes.

1. Little control over cash flow:

This is one of the most common reasons why an SME goes bankrupt. Not knowing how much money is going in and out of the company prevents the entrepreneur from knowing the real state of his business. As a result, he/she will most likely not be able to meet his/her financial commitments or evaluate future investment options. 

Lack of legal advice:

If the legal and fiscal obligations of a business are not taken into account, problems will inevitably arise and this can slow down the growth of the business. At this point it is very important to understand the type of company under which the company is created, its characteristics, regulation and timely filing and payment of taxes.

3. Making bad decisions without a business plan:

A business may be spending a lot of money and time developing a product without having consulted with customers, without being clear about production costs and without assessing whether the product is profitable. In this case, bad decisions can cause the company to go bankrupt. 

4. High indebtedness and low reserves:

It occurs when a company applies for credit without taking into account the limits it can support with its assets. Or because the funds received in the loan have been put to a different use than originally planned. This leads to high financial costs in certain cases.

5. Lack of planning and disorder in the budget:

In business, improvisation is not a good idea. So if you don't have a clear budget, it is very likely that you will fall short of resources and take the wrong path. 

Therefore, we can say that it is very common for companies to go bankrupt due to lack of planning, analysis and decision making regarding cash flow, income statement and management of accounts receivable and payable. So looking for technology platforms such as Chipax, which offers visibility of SME finances in real time, facilitates the control of indicators such as liquidity, profitability, indebtedness and other decisive reports for the welfare of the business.